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Car Insurance - Is It A Racket?
The car insurance industry is one of the most profitable industries in the United States, and that makes car insurance rates higher than every other product and service. Car insurance companies make their money from the premiums you pay for your own coverage. If you have cheap coverage and you drive an older vehicle, you are paying more than if you had the same coverage but drove a newer car. So why is car insurance so expensive?
Car insurance is just like other types of insurance - it protects you from losses. It is an investment and a way to protect your finances from loss. The car insurance industry works like any other business - in order to make more money, they have to increase prices for products and services. High insurance costs result because there is demand and there is always a potential loss element involved.
High insurance rates come from the high number of claims that insurance companies must pay each year. This is an unavoidable aspect of being an insurer. Car accidents are unpredictable, and insurance companies can't be sure how any given situation will turn out. As a result, insurance companies have to charge a high premium in order to cover their inherent risks.
Another reason car insurance is so expensive is that it generally requires a credit check. Poor credit often results in high insurance premiums because insurance companies assume that someone with bad credit will default on the loan. Also, car insurance companies often charge high insurance rates to female drivers. linkedin has shown that women have lower insurance claims than men, and this may account for the increased cost of car insurance for women. This, however, could also reflect the fact that insurance companies assume women are less likely to file insurance claims. This may be partially true; however, there's no real proof that insurance claims for women are any cheaper than claims for men.
Car insurance companies can also jack up the price of car insurance by making it difficult to obtain coverage. Many states have rules that force insurance providers to charge the same rate to everyone even if they don't have car insurance, or by making it hard to obtain insurance at all. For example, many states require that people who get a driver's license must also get car insurance, making it difficult for the uninsured to find coverage. Some states limit the amount of times a person can request car insurance, and some even require people to wait a specific period of time before they can apply for insurance again. These rules make it very difficult for anyone without car insurance to obtain coverage.
Poor driving habits can also affect the cost of car insurance. For example, people who speed or have reckless accidents may get higher rates. Also, people who repeatedly park in a zone, stand outside when their car is in the garage or fail to yield to other cars can see their rates rise quickly. All of these behaviors increase the likelihood that a car accident will occur, which makes it more likely that insurance companies will raise rates.
Finally, car insurance is a racket because many people end up paying for services they never receive. Many people simply buy a car without bothering to purchase collision coverage, or insurance that provides extra insurance should their car be damaged beyond repair. Those who pay the premium but neglect to do the required repairs are subject to high rates from the insurer. The result is that when the car is wrecked, the insured pays more than the market price for the car. Drivers in this category must be very careful not to simply buy the first car they see, since they might end up paying twice as much as the car was really worth.
Car insurance is a racket, and it's getting worse by the day. By doing nothing, drivers are contributing to the astronomical prices that insurance companies charge for vehicles. In the end, it costs everybody more money. Rather than accept this outrageous level of fees, it makes sense to take advantage of the many insurance discounts that are available in today's market.
Website: https://www.linkedin.com/pulse/getting-car-insurance-quote-can-help-you-compare-rates-rachel-king/